1 00:00:00,160 --> 00:00:02,480 This is Jacob Emerson with the Becker's Payer 2 00:00:02,480 --> 00:00:03,620 Issues podcast. 3 00:00:04,000 --> 00:00:07,120 Here's your biweekly industry news briefing for August 4 00:00:07,120 --> 00:00:07,620 14th. 5 00:00:08,160 --> 00:00:11,619 The Medicare Advantage business is facing major challenges 6 00:00:12,000 --> 00:00:14,820 industry wide. Government scrutiny is rising. 7 00:00:15,154 --> 00:00:18,434 CMS regulations and payments are tightening. The cost 8 00:00:18,434 --> 00:00:21,734 of care is rising, and negative media coverage 9 00:00:21,795 --> 00:00:25,234 abounds. In response, the health insurance industry is 10 00:00:25,234 --> 00:00:28,454 planning a 7 figure lobbying blitz in Washington 11 00:00:28,835 --> 00:00:31,380 to fight mounting headwinds and offer a more 12 00:00:31,380 --> 00:00:34,100 optimistic view of the benefits MA plans can 13 00:00:34,100 --> 00:00:35,640 provide to older adults. 14 00:00:36,340 --> 00:00:39,320 AHIP and its CEO, Mike Tufin, told Politico 15 00:00:39,460 --> 00:00:41,460 on August 13th that they're going to be 16 00:00:41,460 --> 00:00:43,380 doing everything they can to make sure that 17 00:00:43,380 --> 00:00:46,405 policymakers across the political spectrum can be introduced 18 00:00:46,405 --> 00:00:48,484 to these seniors and hear their stories and 19 00:00:48,484 --> 00:00:49,225 learn firsthand 20 00:00:49,684 --> 00:00:53,384 how passionately MA beneficiaries feel about their coverage. 21 00:00:53,924 --> 00:00:56,405 Through digital and social media ads, along with 22 00:00:56,405 --> 00:00:59,064 encouraging seniors to advocate for MA to lawmakers, 23 00:00:59,780 --> 00:01:02,260 insurers aren't looking to convey the message that 24 00:01:02,260 --> 00:01:05,159 MA plans provide better and cheaper health coverage 25 00:01:05,380 --> 00:01:06,760 than traditional Medicare. 26 00:01:07,140 --> 00:01:09,700 Mister Tufin said that seniors have been promised 27 00:01:09,700 --> 00:01:11,939 by elected officials in both parties that their 28 00:01:11,939 --> 00:01:14,715 Medicare coverage and care would not be cut, 29 00:01:14,795 --> 00:01:17,354 And so our advertising is about reminding elected 30 00:01:17,354 --> 00:01:19,134 officials that this is a big constituency 31 00:01:19,435 --> 00:01:22,155 that really likes their Medicare Advantage coverage and 32 00:01:22,155 --> 00:01:24,254 expects that promise to be kept. 33 00:01:24,634 --> 00:01:26,554 The timing of the campaign comes ahead of 34 00:01:26,554 --> 00:01:29,435 the Medicare annual enrollment period, which begins October 35 00:01:29,435 --> 00:01:29,935 15th. 36 00:01:30,439 --> 00:01:32,760 The lobbying campaign is not a new strategy 37 00:01:32,760 --> 00:01:35,159 for the insurance industry, which most recently aired 38 00:01:35,159 --> 00:01:37,239 a Super Bowl ad in February with a 39 00:01:37,239 --> 00:01:38,780 simple message for lawmakers, 40 00:01:39,239 --> 00:01:40,939 don't cut Medicare Advantage. 41 00:01:41,319 --> 00:01:43,480 The 32nd ad references some of the major 42 00:01:43,480 --> 00:01:46,444 challenges in the MA markets that's faced its 43 00:01:46,444 --> 00:01:49,825 year, including reduced benchmark payments from CMS. 44 00:01:50,525 --> 00:01:53,165 CVS, Humana, and Centene have all said they 45 00:01:53,165 --> 00:01:55,265 will exit some markets in 2025 46 00:01:55,564 --> 00:01:57,665 and potentially reduce benefit offerings 47 00:01:57,989 --> 00:02:01,030 to accommodate the changing reimbursement environment and rising 48 00:02:01,030 --> 00:02:01,530 costs. 49 00:02:01,909 --> 00:02:04,230 On the media front, national outlets have been 50 00:02:04,230 --> 00:02:06,870 reporting for years that most MA carriers have 51 00:02:06,870 --> 00:02:09,349 faced allegations of billing fraud from the federal 52 00:02:09,349 --> 00:02:09,849 government 53 00:02:10,165 --> 00:02:12,645 and are being probed by lawmakers over their 54 00:02:12,645 --> 00:02:15,625 high claims or prior authorization denial rates. 55 00:02:15,925 --> 00:02:19,125 Upcoding, though, reentered the spotlight in July when 56 00:02:19,125 --> 00:02:21,705 The Wall Street Journal began publishing new investigative 57 00:02:22,004 --> 00:02:23,385 reports on the issue. 58 00:02:23,969 --> 00:02:27,009 Back in October, the DOJ brought criminal charges 59 00:02:27,009 --> 00:02:30,050 against a former MA executive at Elavance owned 60 00:02:30,050 --> 00:02:33,330 HealthSun Health Plans, alleging that executive orchestrated a 61 00:02:33,330 --> 00:02:36,310 scheme to submit false and fraudulent coding information 62 00:02:36,370 --> 00:02:37,189 to CMS. 63 00:02:37,875 --> 00:02:39,715 In the short term, MA payers such as 64 00:02:39,715 --> 00:02:42,435 CVS are warning that senior care costs could 65 00:02:42,435 --> 00:02:44,275 continue to rise in the second half of 66 00:02:44,275 --> 00:02:47,014 this year, with the company noting elevated inpatient 67 00:02:47,155 --> 00:02:50,134 dental and pharmacy claims in the second quarter. 68 00:02:53,069 --> 00:02:55,870 Well, both CVS and Humana contend with those 69 00:02:55,870 --> 00:02:58,909 rising inpatient costs in Medicare Advantage, but each 70 00:02:58,909 --> 00:03:01,810 is pointing to different causes for the increases. 71 00:03:02,269 --> 00:03:04,829 Last year, insurers began warning that MA costs 72 00:03:04,829 --> 00:03:07,735 were climbing as older adults sought out services 73 00:03:07,794 --> 00:03:09,334 put off during the pandemic. 74 00:03:09,715 --> 00:03:13,495 UnitedHealth, the largest MA insurer, has reassured investors 75 00:03:14,594 --> 00:03:17,014 that medical costs are in line with expectations. 76 00:03:17,634 --> 00:03:20,614 Increasing medical costs in the Q2 of 2020 77 00:03:20,719 --> 00:03:23,060 4 were mostly due to relaxed prior authorization 78 00:03:23,280 --> 00:03:26,819 requirements during the Change Healthcare cyber attack. Humana 79 00:03:26,879 --> 00:03:29,780 and CVS, the 2nd and lord 3rd largest 80 00:03:29,919 --> 00:03:32,479 MA insurers, also said costs are on the 81 00:03:32,479 --> 00:03:36,044 rise, especially within inpatient care. On July 31st, 82 00:03:36,504 --> 00:03:39,865 Humana CEO Jim Recton said inpatient admissions among 83 00:03:39,865 --> 00:03:40,365 MA 84 00:03:41,305 --> 00:03:43,724 patients were higher than expected in the Q2. 85 00:03:44,025 --> 00:03:45,865 The company's earnings guidance for the rest of 86 00:03:45,865 --> 00:03:48,365 the year prudently assumes cost will stay elevated 87 00:03:48,425 --> 00:03:50,919 through the end of this year. Humana's CFO 88 00:03:50,979 --> 00:03:53,060 pointed to the 2 midnight rule as the 89 00:03:53,060 --> 00:03:55,800 most likely reason for rising inpatient admissions. 90 00:03:56,099 --> 00:03:57,939 At the beginning of this year, new CMS 91 00:03:57,939 --> 00:04:00,740 regulations took effect requiring MA plans to provide 92 00:04:00,740 --> 00:04:03,495 coverage for inpatient admissions rather than observation 93 00:04:03,875 --> 00:04:06,194 when the admitting physician expects the patient to 94 00:04:06,194 --> 00:04:08,615 require hospital care for at least 2 midnights. 95 00:04:09,155 --> 00:04:12,835 CVS's CFO, Tom Cowhey, said inpatient cost rose 96 00:04:12,835 --> 00:04:13,655 in the Q2 97 00:04:14,194 --> 00:04:16,709 of 2024, but the company does not believe 98 00:04:16,789 --> 00:04:19,050 it was because of the 2 midnight rule. 99 00:04:19,110 --> 00:04:21,449 He said they're just seeing broad based inpatient 100 00:04:21,669 --> 00:04:22,169 pressures 101 00:04:22,470 --> 00:04:22,970 overall. 102 00:04:23,509 --> 00:04:25,589 CVS's earnings guidance for the rest of the 103 00:04:25,589 --> 00:04:27,209 year reflects those costs, 104 00:04:27,750 --> 00:04:29,269 and and the second half of the year 105 00:04:29,269 --> 00:04:31,189 could be higher in the first, he said. 106 00:04:31,189 --> 00:04:33,095 He also said that if current trend continues, 107 00:04:33,235 --> 00:04:35,654 CVS may have to dip into its reserves 108 00:04:35,794 --> 00:04:37,414 to cover the cost of claims. 109 00:04:39,634 --> 00:04:41,875 Well, a big question is looming around the 110 00:04:41,875 --> 00:04:42,375 2024 111 00:04:42,834 --> 00:04:44,134 presidential election. 112 00:04:44,435 --> 00:04:46,854 Is the Affordable Care Act a central issue 113 00:04:46,995 --> 00:04:49,660 or not? With fewer than 90 days until 114 00:04:49,720 --> 00:04:52,759 voting day, the answer remains unclear as Democratic 115 00:04:52,759 --> 00:04:55,800 and Republican campaigns operate with ambiguity when it 116 00:04:55,800 --> 00:04:58,300 comes to their health care plans, and particularly 117 00:04:58,520 --> 00:05:01,100 in the use of actions repeal and replace. 118 00:05:01,425 --> 00:05:04,225 The Republican party's official platform presented at its 119 00:05:04,225 --> 00:05:07,185 convention in Milwaukee in July includes no mention 120 00:05:07,185 --> 00:05:09,665 of the ACA and limited references to other 121 00:05:09,665 --> 00:05:11,365 health care reforms and policies. 122 00:05:11,745 --> 00:05:15,044 Former president Donald Trump can his campaign's policy 123 00:05:15,105 --> 00:05:16,485 plan, agenda 47, 124 00:05:17,039 --> 00:05:19,599 contains sparse health care policy proposals that are 125 00:05:19,599 --> 00:05:22,259 included in the chapter aimed at addressing affordability 126 00:05:22,720 --> 00:05:23,459 more broadly. 127 00:05:23,839 --> 00:05:26,319 The DNC is set to begin August 19th 128 00:05:26,319 --> 00:05:26,979 in Chicago, 129 00:05:27,279 --> 00:05:29,519 leading up to which vice president Kamala Harris 130 00:05:29,519 --> 00:05:32,324 has criticized the Republican's stance on the ACA, 131 00:05:32,485 --> 00:05:34,884 portraying the Republican candidate as a threat to 132 00:05:34,884 --> 00:05:35,944 the law's existence. 133 00:05:36,404 --> 00:05:38,805 As her August 6th rally in Philadelphia to 134 00:05:38,805 --> 00:05:41,205 announce her pick for vice president, miss Harris 135 00:05:41,205 --> 00:05:43,365 said that mister Trump would end the Affordable 136 00:05:43,365 --> 00:05:44,884 Care Act and take us back to a 137 00:05:44,884 --> 00:05:47,230 time when insurance companies had the power to 138 00:05:47,230 --> 00:05:50,110 deny people with preexisting conditions if given the 139 00:05:50,110 --> 00:05:50,610 chance. 140 00:05:51,310 --> 00:05:53,550 A Trump campaign spokesperson told the New York 141 00:05:53,550 --> 00:05:56,189 Times that president Trump is not running to 142 00:05:56,189 --> 00:05:58,584 terminate the ACA. He is running to make 143 00:05:58,584 --> 00:06:00,125 health care actually affordable. 144 00:06:00,745 --> 00:06:04,605 His Republican vice presidential nominee though, JD Vance, 145 00:06:04,665 --> 00:06:08,365 suggested in media that health care system reforms 146 00:06:08,504 --> 00:06:10,604 would be a priority in a Trump administration. 147 00:06:11,540 --> 00:06:13,620 The apparent lack of clarity regarding health care 148 00:06:13,620 --> 00:06:16,199 policy in a presidential election is unusual. 149 00:06:16,660 --> 00:06:19,060 The 2022 elections were the first in more 150 00:06:19,060 --> 00:06:20,980 than a decade in which the security of 151 00:06:20,980 --> 00:06:23,779 the ACA, enacted by president Barack Obama in 152 00:06:23,779 --> 00:06:24,279 2010, 153 00:06:24,660 --> 00:06:26,605 was not a central issue, and the Republican 154 00:06:26,605 --> 00:06:28,785 party had moved away from its long standing 155 00:06:28,845 --> 00:06:31,725 campaign to repeal it. Mister Trump made the 156 00:06:31,725 --> 00:06:34,444 first move against the ACA this election cycle. 157 00:06:34,444 --> 00:06:36,625 And in November, he took to Truth Social 158 00:06:36,764 --> 00:06:39,165 to identify health care as one agenda item 159 00:06:39,165 --> 00:06:40,144 for his 2024 160 00:06:40,444 --> 00:06:43,560 campaign with to replace the landmark mall law 161 00:06:43,560 --> 00:06:46,199 if he won a second term. That prompted 162 00:06:46,199 --> 00:06:48,300 concerns among some senate Republicans. 163 00:06:49,000 --> 00:06:52,199 President Joe Biden then recalled mister Trump's proposed 164 00:06:52,199 --> 00:06:55,160 actions to the ACA in his campaign messaging 165 00:06:55,160 --> 00:06:57,555 in March, but using the word terminate instead 166 00:06:59,475 --> 00:07:02,354 Mister Biden said, quote, now Trump keeps telling 167 00:07:02,354 --> 00:07:04,214 us he's going to terminate the ACA. 168 00:07:04,595 --> 00:07:06,055 Think about what that means. 169 00:07:06,435 --> 00:07:09,794 Mister Biden's remarks coincided with the 14th anniversary 170 00:07:09,794 --> 00:07:11,970 of the law and following the announcement by 171 00:07:11,970 --> 00:07:14,850 CMS, the 20,000,000 people enrolled in individual insurance 172 00:07:14,850 --> 00:07:17,350 plans on the ACA exchanges for 2024. 173 00:07:17,810 --> 00:07:20,389 That's the highest enrollment in the Exchange's history. 174 00:07:21,490 --> 00:07:24,285 The ambiguity surrounding health care policy, though, might 175 00:07:24,365 --> 00:07:26,705 be intentional according to The New York Times. 176 00:07:26,845 --> 00:07:28,845 The most significant blow to the law could 177 00:07:28,845 --> 00:07:29,985 come from inaction. 178 00:07:30,444 --> 00:07:33,165 The Biden Harris administration passed the American Rescue 179 00:07:33,165 --> 00:07:34,305 Plan Act in 2021. 180 00:07:34,925 --> 00:07:37,805 That law enhanced subsidies for individuals purchasing health 181 00:07:37,805 --> 00:07:39,024 coverage on marketplaces, 182 00:07:39,404 --> 00:07:41,209 which are set to expire at the end 183 00:07:41,209 --> 00:07:41,870 of 2025. 184 00:07:42,649 --> 00:07:45,689 Mister Trump and congressional Republicans are unlikely to 185 00:07:45,689 --> 00:07:46,589 support legislation 186 00:07:46,889 --> 00:07:49,449 extending these subsidies, which experts credit for the 187 00:07:49,449 --> 00:07:51,550 high enrollment numbers in recent years and 188 00:07:51,850 --> 00:07:55,104 those have buoyed many large commercial payers' book 189 00:07:55,104 --> 00:07:55,685 of businesses. 190 00:07:56,305 --> 00:07:58,564 The ACA remains one of the most contested 191 00:07:58,625 --> 00:08:02,064 statutes in American history facing 7 Supreme Court 192 00:08:02,064 --> 00:08:05,185 challenges within the last decade. As of April, 193 00:08:05,185 --> 00:08:08,544 62% of Americans hold a favorable opinion of 194 00:08:08,544 --> 00:08:10,324 the ACA while 37% 195 00:08:10,759 --> 00:08:11,899 view it unfavorably. 196 00:08:13,399 --> 00:08:15,479 And finally, Blue Cross Blue Shield of Michigan 197 00:08:15,479 --> 00:08:17,800 is the most efficient user of technology and 198 00:08:17,800 --> 00:08:20,680 the most innovative user of artificial intelligence within 199 00:08:20,680 --> 00:08:22,839 the Blue Cross Blue Shield system. That's according 200 00:08:22,839 --> 00:08:25,100 to a new report from Harvard Business Review. 201 00:08:26,175 --> 00:08:26,675 BCBSM 202 00:08:27,055 --> 00:08:28,654 went from being the least efficient user of 203 00:08:28,654 --> 00:08:30,334 technology in the Blue Cross system to the 204 00:08:30,334 --> 00:08:32,735 most efficient as measured on a technology cost 205 00:08:32,735 --> 00:08:35,215 per employee basis according to the Harvard Business 206 00:08:35,215 --> 00:08:38,274 Review authors. Their journey underscores that prioritizing 207 00:08:38,799 --> 00:08:42,019 security, compliance, a sound architecture, and proactive governance, 208 00:08:42,399 --> 00:08:45,860 organizations can innovate with generative AI within regulatory 209 00:08:45,920 --> 00:08:46,420 bounds. 210 00:08:46,799 --> 00:08:49,220 The authors in interviewed management at BCBSM 211 00:08:49,600 --> 00:08:51,764 to explore the company's technology strategy. 212 00:08:52,245 --> 00:08:54,404 7 years ago, the payer was facing policy 213 00:08:54,404 --> 00:08:57,445 and regulatory pressures stemming from the ACA and 214 00:08:57,445 --> 00:09:00,904 an aging population along with changing customer expectations 215 00:09:01,445 --> 00:09:04,529 like most insurers today. Today, the company has 216 00:09:04,529 --> 00:09:05,430 launched new cloud capabilities, 217 00:09:06,210 --> 00:09:09,910 security protocols, mobile support, 3 generative AI applications, 218 00:09:10,050 --> 00:09:12,310 and more than 20 production AI solutions. 219 00:09:12,690 --> 00:09:13,910 In the article, BCBSM's 220 00:09:14,370 --> 00:09:17,090 management detailed 7 key principles that guided their 221 00:09:17,090 --> 00:09:17,565 strategy. 222 00:09:17,965 --> 00:09:20,625 Get board support on the latest tech initiatives, 223 00:09:21,325 --> 00:09:24,684 involve departments and teams beyond just IT, ensure 224 00:09:24,684 --> 00:09:26,384 scalability and data security, 225 00:09:26,764 --> 00:09:30,544 create adaptable solutions to an evolving environment, continuous 226 00:09:30,684 --> 00:09:31,745 employee education, 227 00:09:32,370 --> 00:09:35,750 mitigate biases, and foster internal innovation. 228 00:09:36,529 --> 00:09:38,529 If you'd like the latest health insurance industry 229 00:09:38,529 --> 00:09:40,929 news delivered straight to your inbox every morning, 230 00:09:40,929 --> 00:09:43,350 subscribe to the Becker's payer issues e newsletter 231 00:09:43,490 --> 00:09:45,190 on our website at beckerspayer.com.